UK's Financial Conduct Authority (FCA) has imposed a £350,000 fine on Wise plc CEO Kristo Käärmann for failing to disclose significant tax issues. This marks the latest development in a prolonged regulatory saga stemming from a 2017 share disposal.

UK Watchdog Fines Wise CEO £350,000 over Tax Default Disclosure Failure

The case originated from Käärmann's sale of shares worth approximately $10 million in September 2017, which generated a capital gains tax liability of more than £720,000. Despite multiple communications from HMRC throughout 2019 and 2020, Käärmann failed to respond or declare the tax liability.

The FCA's investigation revealed that Käärmann breached Senior Management Conduct Rule 4 by failing to notify the regulator about HMRC's determination of his deliberate tax default status and subsequent £365,651 penalty.

“We, and the public, expect high standards from leaders of financial firms, including being frank and open,” stated Therese Chambers, joint executive director of enforcement and oversight at the FCA. “It should have been obvious to Mr Käärmann that he needed to tell us about these issues which were highly relevant to our assessment of his fitness and propriety.”

The regulatory action highlights alleged oversight failures during Käärmann's tenure as CEO of Wise plc and director of two FCA-regulated firms: Wise Assets UK Ltd and Wise Payments Ltd. The Authority determined that while Käärmann's approach was “careless rather than deliberate or reckless,” his inaction prevented real-time assessment of his fitness and propriety for senior management roles.

However, in a statement sent to Finance Magnates, Wise wrote that FCA has not made any “adverse findings regarding Kristo’s continued fitness and propriety to perform his current roles at Wise, nor found that he acted with a lack of integrity.”

“The Board continues to take Wise’s regulatory obligations very seriously. We’re pleased that the FCA’s conclusions are consistent with Wise’s own assessment in 2021, and that the matter is now closed in its entirety,” commented David Wells, the Chairman of Wise. “Following the inclusion of Kristo’s name on HMRC’s list in September 2021, the Board conducted its own investigation and assessed that Kristo remained fit and proper to continue in his roles at Wise.”

The FCA's penalty calculation followed a structured framework:

• Initial assessment based on relevant income: £207,467
• Seriousness level determination: Level 3 (20%)
• Final penalty after 30% settlement discount: £350,000

The fine could have reached £500,000, but Käärmann received a discount for agreeing to resolve the matters promptly.

It's worth noting that this isn’t the first penalty for the CEO of former TransferWise, the London-based financial technology company. Her Majesty’s Revenue and Customs, responsible for tax collection in the UK, also imposed a separate penalty exceeding £365,000 a few years ago.

In 2022, the FCA began investigating why the CEO of Wise failed to meet regulatory obligations related to submitting his personal tax returns. Today’s penalty is a result of that examination.

Wise Hits 8.9 Million Active Users

A fine in the hundreds of thousands of pounds is unlikely to significantly impact a billionaire and his publicly traded company, particularly as the business continues to expand in both user base and transaction volumes.

In its second-quarter report for fiscal year 2025, Wise reported a 23% year-over-year (YoY) growth in active customers, reaching 8.9 million, mainly due to recommendations from existing users. This increase in users contributed to a 20% rise in cross-border transaction volume, totaling £35.2 billion for the quarter.

Despite recent fee reductions, Wise’s underlying income rose by 17% YoY to £337.0 million in Q2. For the first half of FY25, the company reported a 19% growth in underlying income and reaffirmed its full-year growth guidance of 15–20%.

“We remain focused on our mission of building the best way to move and manage the world's money,” Kristo Käärmann, Co-founder and CEO of Wise, commented on the results. “This will take time to fully achieve, but we are pleased with the progress made during the quarter, especially the additional regulatory approvals we have received in key markets.”

The company also highlighted several regulatory achievements, including expanded capabilities for outward transfers from India, an Australian Financial Services License for Investments, and a Payments Institutions license in Brazil.